California Resources Corporation · NYSE:CRC
California Resources — Barclays CEO Energy-Power Conference 2016
39 slides from California Resources's conference presentation, Sep 6, 2016
Slide 1: CEO Energy-Power Conference Barclays
CEO Energy-Power Conference Barclays Todd Stevens| President & CEO| New York, NY| September 6-8, 2016
Slide 2: Forward-Looking / Cautionary Statements
Barclays 2016 Forward-Looking / Cautionary Statements This presentation contains forward-looking statements that involve risks and uncertainties that could materially affect our expected results of operations, liquidity, cash flows and business prospects. Such statements specifically include our exp
Slide 3: Cautionary Statements Regarding Hydrocarbon Quantities
Barclays 2016 Cautionary Statements Regarding Hydrocarbon Quantities We have provided internally generated estimates for proved reserves and aggregated proved, probable and possible reserves (“3P Reserves”) as of December 31, 2015 in this presentation, with each category of reserves estimated in acc
Slide 4: World-Class Resource Base
Barclays 2016 NY00813G / 589203_1.WOR Sacramento Basin 14 MMBoe Proved Reserves 6 MBoe/d production San Joaquin Basin 451 MMBoe Proved Reserves 99 MBoe/d production Ventura Basin 47 MMBoe Proved Reserves 8 MBoe/d production Los Angeles Basin 132 MMBoe Proved Reserves 31 MBoe/d production World-Class
Slide 5: Diverse Assets with Flexible Development Opportunities
Barclays 2016 2015 Net Proved Reserves (MMBoe) 644 2015 % Oil – Net Proved1 72% Pre-Tax Proved PV-10 ($ billion)2 5.1 2015 Avg. Net Production (MBoe/d) 160 2015 % Oil Production 65% 2015 Net Acreage (million acres) 1 2.4 2015 Identified Gross Locations1 23,450 1 As of 12/31/15. Drilling locations ex
Slide 6: 2016 Strategic Focus
Barclays 20166 2016 Strategic Focus • Protect the Base • Defend our Margins • Deleverage the Balance Sheet for Flexibility • Prepare for Change in Cycle
Slide 7: History of Proactive Strategic Decisions
Barclays 2016 History of Proactive Strategic Decisions 7 Swift, decisive actions have positioned company through the commodity downturn. Proactive discussions with lenders and solid asset base provide line of sight to a recovery and an actionable inventory. 0 10 20 30 0 30 60 90 120 Jul-14 Oct-14 Ja
Slide 8: Low Decline Asset Base Requires Low Levels of D&C Capital
Barclays 2016 Low Decline Asset Base Requires Low Levels of D&C* Capital Rich asset portfolio and thoughtful capital allocation deliver high margin production and operational flexibility through the price cycle • Conventional assets with long production life and relatively low decline rates • Large
Slide 9: Asset Base Preserves Value
Barclays 2016 Asset Base Preserves Value 9 • Based on 7/1/2016 proved reserve report run* • Strip prices as of 7/22/2016 • No capital invested beyond proved developed reserves • No value included for non-proved or non-borrowing base assets Total Proved (Strip) 2016 2017** 2018** 2019** 2020** 2021**
Slide 10: NAV Well in Excess of Market Value
Barclays 2016 NAV1 Well in Excess of Market Value 10 1 Current CRC estimate of Net Asset Value applying a 15% tax rate. 2 Resource inventory comprises probable, possible, contingent reserves and prospective resources. Contingent reserves reflect technically proven reserves that are not economic at c
Slide 11: Capital Allocation Strategies with Improving Strip
Barclays 2016 • Investment balanced against deleveraging opportunities with goal of high single-digit production growth • Existing Core Areas • Focus on 2-3 Growth Areas Elk Hills Analogs Elk Hills Adjacent Areas Heavy Oil • Joint Venture opportunities • Double-digit growth possible if support
Slide 12: Reduced Debt by Over $1.4 Billion to Date
Barclays 2016 $94 $55 $64 $51 $45 $35 $47 $47 0 10 20 30 40 50 60 70 80 90 100 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 10/1/14 3/31/15 6/30/15 9/30/15 12/31/15 3/31/16 6/30/16 6/30/16 Pro Forma B re n t Oil ($ /B b l) Total D eb t ($ M M ) Total Debt Long Term Notes Term Loan Revolving C
Slide 13: Significant Debt Reduction From Post-Spin Peak
Barclays 2016 6,765* 5,315 4,000 5,000 6,000 7,000 2Q15 Debt Exchange for 2L Open Market Repurchases Equity for Debt Exchange Cash Tender Operating Cash Flow Pro Forma To ta l D e b t ($ MM ) Significant Debt Reduction From Post-Spin Peak Executed on best available deleveraging options with lowest p
Slide 14: Living within Cash Flow Plus Additional Liquidity
Barclays 2016 Living within Cash Flow Plus Additional Liquidity 14 Based on our current capital program and at current price levels, we believe that we will have sufficient liquidity for the rest of this year, all of 2017 and well into 2018. Consensus2 EBITDA Consensus2 EBITDA Revolver Availability
Slide 15: Sophisticated Well Surveillance Enhances Base
Barclays 2016 Sophisticated Well Surveillance Enhances Base 15 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 G ro ss B /d Continued Improvement in Downtime Since Spin Well Servicing Surface Reservoir Drilling
Slide 16: Workover Activity Supports Base Production
Barclays 2016 Workover Activity Supports Base Production 16 0 20 40 60 80 100 120 140 160 180 0 10 20 30 40 50 60 Se p -1 4 O ct- 1 4 N o v- 14 D ec- 1 4 Ja n -1 5 Fe b -1 5 M ar -1 5 A p r-1 5 M ay- 1 5 Ju n -1 5 Ju l- 1 5 A u g-1 5 Se p -1 5 O ct- 1 5 N o v- 15 D ec- 1 5 Ja n -1 6 Fe b -1 6 M ar -
Slide 17: Continued Operating Cost Reductions and Efficiencies Defend Margins
Barclays 2016 $- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 P ro d u ct io n C o st s ($ /B o e) Steam Injectant Gas Plant Expense Energy Supports and Other Downhole Maintenance Workovers/Well Enhancement Surface Operations and Maintenance Pipeline
Slide 18: San Joaquin Basin
Barclays 2016 San Joaquin Basin • Oil and gas discovered in the late 1800s • Accounts for ~69% of CRC production • ~25 billion barrels OOIP in CRC fields1 • Cretaceous to Pleistocene sedimentary section (>25,000 feet) • Source rocks are organic rich shales from Moreno, Kreyenhagen, Tumey, and Monter
Slide 19: Elk Hills - Resilient Asset Base
Barclays 2016 0 200 400 600 800 1,000 1,200 0 10 20 30 40 50 60 70 80 90 2010 2011 2012 2013 2014 2015 1H 2016 N et D ev el o pme n t Ca p it al ( $MM ) To ta l P ro d u ct io n ( MBo e/d ) Net Production (MBoe/d) Net Development Capital ($MM) CRCPre Spin-off Elk Hills - Resilient Asset Base 19
Slide 20: Effective Management of Elk Hills Field Operating Costs
Barclays 2016 Effective Management of Elk Hills Field Operating Costs 20 136,000 94,000 68,000 54,000 - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 2012 2014 2015 1H 2016 O p er ati n g Co st / We ll ($ /w ell ) Elk Hills Field - Opex per Well 10 11 12 13 14 15 16 2012 2014 2015 1H 2
Slide 21: Elk Hills Adjacent Field: Buena Vista Field Development
Barclays 2016 Elk Hills Adjacent Field: Buena Vista Field Development 21 2500 TVD 2750 3000 3250 3750 4000 4250 3500 B V S ha le B V W at e rf loo d Effective Production Management • Current net production of ~10,000 Boe/d (no rigs since 2014) • Surveillance with modern tools • Daily exception repor
Slide 22: Value Chain Progress: Building Inventory Across Fields
Barclays 2016 Value Chain Progress: Building Inventory Across 137 Fields 22 Legacy Field Review - Paloma • Technical reevaluation doubled OOIP estimate • Analog field performance • Applying new technology and thinking to generate new opportunities Delineation - Pleito • Grew production since acquisi
Slide 23: Progressing Inventory to VCI Threshold
Barclays 2016 Progressing Inventory to VCI Threshold 23 Economic Project Inventory Brent Marker Price ($/Bbl) 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2015 2016 2015 2016 2015 2016 $40 $50 $60 Dri llin g an d W o rk o ver C ap ex ( $ M M ) VCI > 1.0 VCI > 1.3
Slide 24: Elk Hills Analog: Kettleman North Dome
Barclays 2016 Elk Hills Analog: Kettleman North Dome 24 • OOIP of 4 billion barrels, 14,000 Acres (2 mi. wide, 15 mi. long) • 1000’s of feet of stacked pay • Light oil – API > 36o • WI=100% and NRI=80% in KNDU • Modern formation evaluation, new wells, and workovers • Advancing the understanding and
Slide 25: Poised to Take Advantage of a Commodity Price Recovery
Barclays 2016 NY00813G / 589203_1.WOR Sacramento Basin 14 MMBoe Proved Reserves 6 MBoe/d production San Joaquin Basin 451 MMBoe Proved Reserves 99 MBoe/d production Ventura Basin 47 MMBoe Proved Reserves 8 MBoe/d production Los Angeles Basin 132 MMBoe Proved Reserves 31 MBoe/d production World-Cla
Slide 26: Appendix
Barclays 2016 California Resources Corporation Appendix 26
Slide 27: Continued Progress on Balance Sheet
Barclays 2016 Pro forma as of 6/30/16 to reflect the term loan transactions and the tender offers ($MM) $18 $449 $1,000 $195 $149 $2,250 212 $0 $500 $1,000 $1,500 $2,000 $2,500 Ja n -1 6 Ju l-1 6 Ja n -1 7 Ju l-1 7 Ja n -1 8 Ju l-1 8 Ja n -1 9 Ju l-1 9 Ja n -2 0 Ju l-2 0 Ja n -2 1 Ju l-2 1 Ja n -2 2
Slide 28: Opportunistically Built Oil Hedge Portfolio
Barclays 2016 Opportunistically Built Oil Hedge Portfolio* • Hedge book started at zero post spin; we target hedges on 50% of oil production • Strategy focuses on protecting cash flow for capital investments and covenant compliance; delivered $75 million of protection in 1H 2016. Q3 2016 Q4 2016 Q1
Slide 29: CRC - Leading California Producer
Barclays 2016 CRC - Leading California Producer California Pure-Play Top California Producers in 2015* • An independent E&P company spun off by Occidental Focused on high-return assets in California • Largest private mineral acreage-holder, with 2.4 million net acres1 ~60% of total net mineral i
Slide 30: Elk Hills Field Overview
Barclays 2016 0 20 40 60 80 100 120 140 1998 2000 2002 2004 2006 2008 2010 2012 2014 N et MB o e/ d • CRC’s flagship asset, a 100 year-old field with exploration opportunities • Large fee property with multiple stacked reservoirs • Light oil from conventional and unconventional production • Largest
Slide 31: Los Angeles Basin
Barclays 2016 Los Angeles Basin • Large, world-class basin with thick deposits • Kitchen is the entire basin, hydrocarbons did not migrate laterally; basin depth (>30,000 ft) • ~10 billion barrels OOIP in CRC fields1 • Most significant discoveries date to the 1920s – past exploration focused on seep
Slide 32: Wilmington Field Overview
Barclays 2016 - 50 100 150 200 250 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 M M B o e Net Proved Reserves Production to Date Overview Field Map Proved Reserves & Cumulative Production Structure Map & Acquisition History * • CRC’s flagship coastal asset: acquire
Slide 33: Ventura Basin
Barclays 2016 Ventura Basin • Estimated ~3.5 billion barrels OOIP in CRC fields1 • Operate 29 fields (about 40% of basin) • ~300,000 net acres • Multiple source rocks: Miocene (Monterey and Rincon Formations), Eocene (Anita and Cozy Dell Formations) • 1H 2016 average net production of 8 MBoe/d (69%
Slide 34: Sacramento Basin
Barclays 2016 Sacramento Basin • Exploration started in 1918 and focused on seeps and topographic highs. In the 1970s the use of multifold 2D seismic led to largest discoveries • Cretaceous Starkey, Winters, Forbes, Kione, and the Eocene Domengine sands • Most current production is less than 10,000
Slide 35: Large in Place Volumes with Significant Upside for CRC
Barclays 2016 Recovery Factors for Discovered Fields¹ 9 40 0 5 10 15 20 25 30 35 40 45 Cum Recovered to Date Remaining 3P + Contingent RF + 10% RF + 15% RF + 20% Original in Place Billion Boe 1 Does not include undiscovered unconventional resource potential. • In place volumes of ~40 billion Boe at
Slide 36: A Net Water Supplier
Barclays 2016 A Net Water Supplier • CRC’s delivery of reclaimed produced water to agriculture in 2015 exceeded the amount of fresh water we purchased by nearly 1 billion gallons • We expedited the North Kern Drought Relief project in 2015, achieving a 30% increase in our water supply to agriculture
Slide 37: End Notes
Barclays 2016 End Notes: 37 (1) Our total production costs consist of variable costs that tend to vary depending on production levels, and fixed costs that typically do not vary with changes in production levels or well counts, especially in the short term. The substantial majority of our near-term
Slide 38: Non-GAAP Reconciliation for Adjusted EBITDAX
Barclays 2016 Non-GAAP Reconciliation for Adjusted EBITDAX For the Second Quarter Ended June 30, For the Six Months Ended June 30, ($ in millions) 2016 2015 2016 2015 Net loss ($140) ($68) ($190) ($168) Interest and debt expense 74 83 148 162 Income taxes benefit - (46) (78) (115) Depreciation, depl
Slide 39: Non-GAAP Reconciliation for PV-10
Barclays 2016 Non-GAAP Reconciliation for PV-10 ($ in millions) At December 31, 2015 PV-10 of Proved Reserves $5,059 Present value of future income taxes discounted at 10% (1,035) Standardized Measure of Discounted Future Net Cash Flows $4,024 PV-10 is a non-GAAP financial measure and represents the
California Resources — Barclays CEO Energy-Power Conference 2016 on 6ix